business qualifies as a under guidelines if it is incorporated as a Private Company, LLP, or Registered Partnership Firm, is up to old, and has an annual turnover not exceeding , provided its operations focus on and a . The registration process involves two steps: first, via the MCA portal or Registrar of Firms, and second, obtaining through an application on the . Upon recognition, eligible startups can claim substantial , notably a $\mathbfholiday}$ for out of 10 years of incorporation under , subject to specific conditions (e.g., being incorporated after and not being a result of reconstitution). Furthermore, although ( ) is for fresh share issuances from , startups can still leverage (Sec. and ). Regulatory advantages include reduced compliance burdens via under and , and a provision for within under the Insolvency Bankruptcy Code.
1. Definition of a Startup (as per DPIIT):
A business is considered a startup if:
- It is incorporated as a Private Limited Company (Companies Act, 2013), LLP (LLP Act, 2008), or Registered Partnership Firm.
- Age of entity: up to 10 years from incorporation.
- Annual turnover: not exceeding ₹100 crore in any year.
- The entity is working towards innovation, development, improvement of products/processes/services or has a scalable business model with potential for employment generation or wealth creation.
2. Where & How to Register:
Startups need two levels of registration:
- Level I – Business Incorporation
| Form of an Entity | Registration | Documents Required |
| Company | Register at MCA Portal www.mca.gov.in) using SPICe+ Form. | PAN, ADHAAR Card, Digital signature, Declaration (INC-9) of all directors and subscribers Latest utility bill for address proof, e-MOC and e-AOA and Board Resolution copy |
| LLP | Register at MCA Portal www.mca.gov.in) using FiLLiP | PAN, ADHAAR Card, Digital signature, of all Partners ,Consent of partners, and Photos, Latest utility bill for address proof, LLP agreement. |
| Partnership Firms | Register under Partnership Act with Registrar of Firms (state-wise) | Form- I with partnership deed + PAN+ address Proof |
- Level II – Startup Recognition
- Apply on the Startup India Portal → https://www.startupindia.gov.in.
- Create an Investor account on gov.in, Fill the application form there only and Upload:
- Certificate of Incorporation/Registration.
- Details of business & innovation.
- Once approved → Entity get a DPIIT Recognition Certificate.
3. Key Benefits & Exemptions for Startups:
(A) Tax Benefits:
Section 80-IAC: Eligible startups can claim 100% tax holiday for 3 consecutive years out of 10 years of incorporation if it satisfies the condition of eligible business:
1) Business to be eligible must not be formed out of reconstitution, revival and re-establishment.
2) Must have incorporated on or after 1/04/2016 but before 1/04/2030
3) It is not formed by transfer of Plant or machinery previously used in other purpose.
4) It holds a certificate of eligible business from Inter-Ministerial Board of certifications i.e DPIIT-recognized and incorporated as a Company/LLP (not Partnership).
After getting recognition from DPIIT for availing exemption of 80 IAC the Start –up entity has to fill Form- I on Start-up portal along with the mentioned below documents:
a) Annual Accounts of the startup for the last three financial years( if any)
b) Copies of the income-tax returns of the last three financial year
c) Copy of MOA and AOA
d) Copy of DPIIT recognition
e) Pattern of shareholding etc.
f) DPIIT recognition Certificate
g) Incorporation Certificate application is processed and then once you get the certificate, can avail advantage of exemption.
Point to be noted it’s better to get this certification as soon as incorporated so that exemption can be availed as and when needed without any procedural delay.
(B) Angel Tax Exemption (Section 56(2) (viib):
Earlier, DPIIT-recognized startups could claim exemption from tax on share premium by filing Form-2, subject to conditions such as the ₹25 crore capital and submission of valuation reports. However, as per Union Budget 2024, Angel Tax has been abolished w.e.f. 1st April 2025. Hence, for fresh share issuances made on or after this date, no exemption application is required.
(C) Capital Gain Exemptions:
- Section 54GB: Exemption for capital gains arising on sale of residential property, if invested in equity shares of eligible startups.
- Section 54EE: Exemption if long term capital gain arises on the investment in certain Central Government notified funds.
4) Regulatory Benefits:
- Self-Certification under 6 Labour Laws such as ESI Act, Payment of Gratuity Act PPF and so on. Start-up can get self-certification in 3 Environmental Laws also like Water (Prevention & Control of Pollution) Act, 1974 etc. Which ultimately reduces compliance burden.
- Easy Winding Up within 90 days under Insolvency & Bankruptcy Code (fast-track exit).
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